2013-08-31 16:27:37 - Recently published research from Business Monitor International, "France Agribusiness Report Q4 2013", is now available at Fast Market Research
We believe the grain sector in France will continue to outperform other agribusiness sectors in terms of production growth. This will be reinforced by ongoing reforms of Common Agricultural Policy subsidies that are likely to have more of an effect on dairy and livestock farmers because they are often smaller than grain farmers. The agriculture minister's proposal to shift part of EU subsidies from crop farmers to dairy or livestock farmers could support production growth in the latter, even though we do not see this as sufficient to turn around current production trajectories for each sector.
* Wheat production growth to 2016/17: 12.7% to 40.6mn tonnes. We expect wheat to remain the most profitable crop in the country and
the crop most in demand for domestic use and exports.
* Poultry consumption growth to 2017: 4.9% to 1.7mn tonnes. We see stronger long-term poultry demand compared with pork and beef because of poultry's generally higher affordability and reputation for better health benefits than red meat.
* Cheese production growth to 2016/17: 8.8% to 2.1mn tonnes. Over the longer term, we expect consolidation in the dairy industry to allow producers to take advantage of rising quotas and export demand. We also believe the European Commission's decision to adopt new legislation that allows producers to collectively negotiate contracts with processors will improve the profitability of milk production, in turn supporting output.
* 2013 real GDP growth: -0.3% (down from 0.1% in 2012).
* Consumer price inflation: 1.5% average in 2013 (slightly down from 2.0% in 2012).
* BMI universe agribusiness market value: 0.8% year-on-year (y-o-y) decrease to US$37.2bn in 2012/13.
* Competitive landscape: We are positive about Vilmorin, as the company's share price seems to be undervalued. We see tremendous long-term opportunities in the seeds markets, especially in markets such as the Middle East and Asia, where the company is developing.
Full Report Details at
- www.fastmr.com/prod/670638_france_agribusiness_report_q4_2013.as ..
As the largest wheat exporter in the EU, France has been filling the gap left by the Black Sea region in many export markets, especially in the Middle East, thus continuing to deplete its stocks. France's soft wheat exports jumped 28% in April on higher shipments to Algeria and Morocco, the largest buyers of French wheat outside the EU. Crop office FranceAgriMer last month raised its 2012/13 outlook for soft wheat exports to 17.1mn tonnes (compared with 16.9mn tonnes previously). This compares with wheat exports of 16.6mn tonnes in 2011/12.
French poultry producer Doux continues to battle with bankruptcy and restructuring at home; however, it is experiencing strong export prospects, especially in the Middle East. That said, recent sources in Saudi Arabia have indicated that the company is selling halal chicken meat without having the right controls and authorisation to do so. The French government has not reacted to any of these accusations, and Doux has also declined to comment. This could be a significant concern if the company was to be prevented from exporting to the Middle Eastern market.
We believe the recent proposal by the EU to put a cap on subsidies received by large farms will support production growth, as EU farms are smaller than those in other major agricultural producers. The Common Agricultural Policy reform proposes to decrease subsidies on a sliding scale for farms receiving more than EUR150,000 in annual subsidies. The proposal would cap subsidies at EUR300,000; this will remove funding for Europe's largest farms, which currently receive the majority of subsidies. This is peculiar in a region where average farm size is 12 hectares (ha), compared with 180ha in the US. Ultimately, we expect these losses to be limited to about 30% in the near term.
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